By Patrick A. Heller
Last week was a perfect example of the efforts by the U.S. government and its central bank and private trading partners to manipulate the price of gold downward.
From the perspective of the U.S. government, several events occurred where there was a need for the U.S. dollar to appear strong and, consequently, for the price of gold to look weak. First, the U.S. government had over $200 billion of debt to sell, one of the largest weekly totals in history. Second, about 150 Chinese government officials came to Washington, D.C., for meetings on Tuesday and Wednesday. You can be sure that the Chinese were looking for reassurance that all of the U.S. dollars and U.S. Treasury debt in their central bank reserves would hold their value. The U.S., on its side, would be looking for confirmation that the Chinese would continue purchasing U.S. Treasury debt and even increase their support of the dollar. Third, commodity options expired on Tuesday. A lower gold price would mean that fewer options contracts would be tendered for immediate delivery of physical metal.
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